PHILIPPINE PROPERTY MARKET REPORTS

We are pleased to announce that the 1st quarter 2018 property market report is now available. Global real estate services company Colliers International, in a recently released report, identified key issues and opportunities in the Philippine property market particularly in the office, residential and retail.


OFFICE
In the last five years, the office sector has been characterized by shifting industry drivers. In Q1 2018, we note the increasing importance of knowledge process outsourcers (KPOs). The breakdown of transaction volumes shows KPOs representing 28% of total volumes, up from merely 16% throughout 2017. This is a welcome development considering concerns of a potential reduction in fiscal incentives because of the impending passage of the Tax Reform for Acceleration and Inclusion - package two (TRAIN 2).  Meanwhile, due to strong demand, vacancy stayed below 6.0% in Q1 2018 despite the completion of 470,000 sq m (5.1 million sq ft) of new supply. We expect 900,000 sq m (9.7 million sq ft) annually over the next three years, or a 23% increase from current levels, pushing vacancy upward. Colliers believes that as vacancy increases, competition will intensify as developers look to attract more discerning tenants. Colliers recommends that developers upgrade their buildings, creating a seamless and efficient overall experience for today’s workforce. This can be done by incorporating technology and design enhancements in office space as we see the increasing importance of Leadership in Energy and Environmental Design (LEED) certified options to attract major tenants.

RESIDENTIAL
Q1 2018 numbers seem to indicate another strong year for the residential market as total pre-sales take-up was over 11,00 units, slightly higher than the same period year. Strong demand continued to push prices upward, despite the large volume of supply. Given these characteristics, interested stakeholders have expressed concerns of a possible housing bubble. Colliers thoroughly analysed supply projections resulting in a significant 53% downward revision in 2018 forecasts to 12,750 units, compared to the 27,200 units forecasted in Q4 2017.  We believe this revision effectively allays concerns of a bubble burst. The forecast may be revised downwards again based on construction progress and developers supply strategies. Vacancy was also seen declining, hinting that demand is real and not purely speculative. As such, we recommend that developers continue to launch projects while bearing in mind that Metro Manila is still a competitive market where buyers and tenants are closely considering location and overall living experience.

RETAIL
New brick-and-mortar malls are opening across Metro Manila while online shopping platforms are proliferating and offering new items by the day. Colliers believes that both physical and online retail platforms need to highlight their differentiating features to attract more consumers and stay in the game. We believe that mall operators that are redeveloping their retail outlets should use the additional space to tweak their tenant mixes and feature a more lifestyle-oriented merchandise mix to sustain consumer traffic. Moving forward, Colliers encourages mall operators to cash in on rising tourist arrivals and spending by acquiring mobile payment schemes that cater to Metro Manila’s major tourist markets such as the Chinese and Korean visitors that cover about 40% of the country's total arrivals. Operators of physical malls should also maximize their partnership with online sales platforms. Meanwhile, e-commerce sites should improve the security features of their websites as authenticity of items being sold online remains a top concern amongst Filipino shoppers.

Learn more on what transpired during the fourth quarter by downloading the links below.

1Q 2018 Office Report

1Q 2018 Residential Report

1Q 2018 Retail Report


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Colliers International | Manila 11F Frabelle Business Center, 111 Rada Street Legaspi Village, Makati City 1229 Philippines | Tel: +632 888 9988